Japanese Fintech Paidy Secures $143 Million to Expand Instant Credit Services
Paidy raises $143 million in equity and debt financing, marking the largest investment in Japan's fintech sector to date. The funds will help the startup grow its user base and partner with more large-scale merchants.
Paidy, a Japanese financial technology startup, raises a total of $143 million in new financing to expand its instant credit services for online shoppers. This funding includes an $83 million Series C extension backed by PayPal Ventures and several other investment firms, along with $60 million in debt financing provided by major Japanese banks and Goldman Sachs Japan. This investment represents the largest funding round to date in the Japanese fintech industry and brings the company's total raised capital to $163 million.
The company plans to use this new capital to sign large-scale merchants, introduce new financial services, and grow its user base to 11 million accounts by the end of 2020. Instead of pursuing a Series D round, Paidy chooses to extend its Series C to preserve the equity ratio for existing investors and issue the same preferred shares as previous funding rounds. The debt financing consists of a $52 million warehouse facility with Goldman Sachs Japan and an $8 million credit facility with three major Japanese banks.
Paidy addresses a unique challenge in the Japanese e-commerce market where many consumers avoid using credit cards and prefer cash payments at convenience stores or upon delivery. By allowing customers to check out using just their mobile phone number and email address, Paidy eliminates the need for a credit card or pre-existing account. The startup pays merchants upfront and bills customers monthly, using proprietary machine learning models to assess creditworthiness and significantly reduce incomplete transactions.